With more people working from home amid the COVID-19 pandemic, a recent Ninth Circuit ruling involving a health care staffing company emphasizes the need to properly reimburse for expenses to avoid wage law violations.
In Clarke v. AMN Services, the federal appeals court held that many aspects of AMN’s per diem payment system didn’t function as expense reimbursement but as remuneration for work hours, thus subject to pay rates used to calculate overtime under California and federal law.
Companies using flat-sum reimbursement methods may need to evaluate their compliance with the U.S. Fair Labor Standards Act (FLSA) and section 2802 of the California Labor Code, professor Thomas Lenz, a lecturer at USC Gould School of Law, told the Northern California Record.
“The ruling emphasizes that reimbursement can’t be tied to hours worked but to actual expenses incurred,” Lenz said.
Given the present increase in telecommuting, it’s crucial that reasonable, necessary expenses are properly documented and reimbursed.
“With the millions of people working from home, there’s a lot of people incurring expenses and attorneys on the plaintiffs’ side are looking for these cases, they are expecting cases like this,” Lenz said.
“Reimbursement is detail intensive,” said Lenz, who is also a partner handling labor and employment law at Atkinson, Andelson, Loya, Ruud & Romo. “Employers are going to need to follow the details of each situation, require employees to submit support claims for reimbursements, and pay out consistently with section 2802, which is pretty specific about reimbursing employees for necessary expenses or losses.”
Policies related to convenience expenses also should be agreed to in writing.
“People are working in different ways to perform their duties than they might have pre-pandemic,” Lenz said. “Clearly, this is one where the details will matter, and there could be a lot of different cases depending on how reimbursements are addressed.”